The action was taken in reaction to a flurry of FUD and assaults from the establishment media, especially the Wall Street Journal.
In order to reestablish trust in the cryptocurrency market, Tether, the biggest stablecoin producer in the world, has promised to gradually cease lending money from its reserves.
The virtual currency issuer answered recent mainstream press FUD over its secured debt in an article published on December 13 as well as additional FUD that had circulated in the “rumor mill.”
The firm, Tether has stated that the company will be removing these debts during 2023 and that the company’s lending institutions are over-collateralized and supported by “highly liquid assets”:
According to the corporation, the firms’ lending institutions function similarly to commercial banks lending to consumers using guaranteed collateral. Tether, on the other hand, asserted that its payments are more than 100% supported, unlike banks, which run on reserve requirements.
This decision was probably made in reaction to a Wall Street Journal article published earlier in the month that said these loans constituted hazardous and that the “business might not have sufficient liquid assets to satisfy redemptions in a crisis.”
Tether reduced The Loans To Zero:
The Wall Street Journal has already attacked the firm. The publication said in Aug that a 0.3% decline in Tether’s assets would cause it to be considered “technically bankrupt.” At the moment, the stablecoin issuer denied the allegations, claiming that by working with a top-5 accountancy firm, it has improved the reliability and openness of its attestations. These attestations state that 82% of the reserves of Tether are stored in “highly liquid” assets.
Replying to more press FUD in October, Tether significantly reduced the amount of commercial paper inside its reserves as well as replaced it with Treasury of US notes.